News / Business
Daily Natural Gas Report
Daily Natural Gas Price Report is a daily commentary discussing price moves for natural gas as it relates primarily to the purchase of natural gas for businesses.
Despite a major heating up of tropical storm activity in the Atlantic, natural gas prices fell on Friday, August 14, 2009, for the sixth consecutive day. What is interesting about the price decline is that most of it occurred in the September contract. The September 2009 natural gas NYMEX contract is now trading at a $.40 per MMBtu premium over October -- that's a very large premium given that storage is full and demand hasn't really increased. Many believe the decline in September is due to the rolling over of positions by UNG, an exchange-traded fund that focuses primarily on the front-month contract. Their website indicates that they will roll positions from August 13 - 18. This means the selling of September and the purchasing of October. The third quarter low of $3.155 per MMBtu is now in danger.
The spread between September and October 2009 creates some concern for us. It is simply just too large. If this entire price move down was predicated on merely the fundamentals of supply and demand, one would not expect the October 2009 natural gas NYMEX contract to be trading at such a large premium to the front-month contract. The rolling of UNG contracts will end tomorrow. There have been six straight days of declines in natural gas prices and so we expect some profit-taking to occur in the near future. That profit-taking is expected to lead to a price bounce.
OUTLOOK: We're still quite bearish long-term and expect a price pullback -- not only in the front-month -- but in 2010 at some point in the next 30-90 days.
About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned and is not a natural gas marketer, broker or supplier. We are an independent, natural gas buying advisory service that provides assistance nationwide to commercial and industrial businesses in the purchase of natural gas and/or the development and implementation of a natural gas buying strategy.
Learn more about the services of Energy Solutions, Inc. at www.energysolutionsinc.com
